By Jaspreet Kalra
MUMBAI (Reuters) -Global equities were steady on Thursday with Wall Street headed for a quiet open while the dollar slipped as traders firmed wagers that the Federal Reserve will cut interest rates next month.
Equity futures pointed to a steady start for S&P 500 and the tech-heavy Nasdaq despite a wobble in Asian and European tech stocks following bellwether Nvidia’s results.
Nvidia’s shares were down around 1.5% in U.S. pre-market trading as uncertainty over its China businesses clouded a better-than-expected revenue forecast for the next quarter.
Semiconductor stocks in Europe traded mixed as investors parsed the firm’s outlook which also weighed on tech-sector stocks in Asia. Shares of Taiwan Semiconductor Manufacturing Company declined 2.5%.
Nvidia’s outlook was above consensus analyst expectations but also disappointed investors accustomed to blowout results.
Broader European stock indexes were choppy with the pan-European Stoxx 600 down about 0.3%, reversing early gains.
Futures tracking the rate-sensitive U.S. Russell 2000 small-caps index were up 0.7%. Money markets are pricing in an over 85% chance of a rate cut by the Federal Reserve next month.
The rate cut wagers have weighed on the dollar this month, pushing it down 2% against a basket of peers. It was last down 0.2% at 97.9.
“Unless we see a very robust employment report in early September, I think the Fed is going to start to cut rates,” said Lee Hardman, senior currency analyst at MUFG.
Earlier this week, President Donald Trump said he is firing Federal Reserve Governor Lisa Cook, ramping up his campaign to assert influence on the central bank which left some investors worried about the political influence on monetary policy decisions.
Cook will file a lawsuit to prevent President Donald Trump from firing her, a lawyer for the embattled central bank official said on Tuesday.
“This week’s events underline our view that the FOMC may continue to resist delivering the amount of rate cuts that President Trump desires this year, but next year it will be increasingly difficult to keep White House influences from policy rate decisions,” Philip Marey, senior U.S. strategist at Rabobank said in a note.
Elsewhere, concerns over France’s fiscal path are likely to stay in focus for regional markets following Prime Minister Francois Bayrou’s gamble to win backing for his deeply unpopular debt-reduction plan via a confidence vote next month.
France’s 10-year government bond yield eased slightly on Thursday but remained close to its highest level since March.
The spread between the 10-year benchmark bund and its French counterpart eased slightly after hitting a seven-month peak of nearly 83 basis points in the previous session.
Developments in France are “putting a bit of a dampener on upside potential for euro-dollar but for us the bigger story is obviously what could happen with the Fed,” Hardman said.
On Thursday, the single currency was up 0.2% at $1.1667 while sterling was up 0.1% at $1.3515. Against the Japanese yen, the dollar slipped 0.3% to 146.93 yen.
The interest-rate-expectation sensitive 2-year U.S. Treasury yield was at 3.6290%, down 6 basis points on the week and hovering close to its lowest level since late-April. In commodities markets, spot gold held firm near a more-than-two-week peak on Thursday and was last up 0.2% at $3,405.56.
(Reporting by Jaspreet KalraEditing by Shri Navaratnam, Sonali Paul, Frances Kerry and Sharon Singleton)
